IBM Begins Round of Layoffs

IBM has initiated what is expected to be its biggest round of layoffs since the early '90s, with sources inside the company saying the computer maker plans to let go of about 8,000 employees out of 320,000 worldwide.

IBM has initiated what is expected to be its biggest round of layoffs since the early '90s, with sources inside the company saying the computer maker plans to let go of about 8,000 employees out of 320,000 worldwide.

While sources have previously told eWEEK that IBM's semiconductor manufacturing facilities are expected to take the hardest hit, a spokesman for IBM's Microelectronics division said the unit has not announced any layoffs.

"Microelectronics has not announced any reductions today," said spokesman William O'Leary. "There have been reductions announced in other parts of the business, but none of them are microelectronics related," he said, although he acknowledge cutbacks may occur in the future.

O'Leary also dismissed earlier reports that IBM was considering selling its Burlington, Vt., facility, which employs about 8,000 workers.

A senior IBM vice president, he said, "told employees today at the Burlington site that it is not for sale."

So far, layoff notices have been confirmed at IBM's facilities in Endicott, East Fishkill and Somers, N.Y., Essex Junction, Vt., and Research Triangle Park, N.C., where IBM employs about 14,000 workers.

A corporate spokeswoman for IBM, based on Armonk, N.Y., would only say that the computer maker took "some actions today," but would not provide further information on the layoffs.

"We continuously evaluate our business and we are achieving greater efficiencies by eliminating redundancies and consolidating work," she said.

In a meeting with market analysts earlier this month, chief executive Sam Palmisano confirmed the company was looking to reduce its head count after its first quarter profits fell 32 percent from a year ago and sales declined 12 percent.

IBM has blamed the downturn on a weak global economy and industry-wide decline in IT spending.

Analysts have speculated IBM will seek to cut its worldwide employment by 20,000 jobs, with most of those cuts occurring through normal attrition. However, if company sales should continue to decline, sources said, more layoffs would likely be initiated next quarter.

Palmisano's decision to trim IBM's ranks comes only two months after he succeeded Chairman Lou Gerstner as CEO. The new cutbacks are expected to pale in comparison to those initiated by Gerstner when he took over the then-troubled computer maker in 1993. After only three months as CEO, Gerstner ordered more than 60,000 layoffs, at that time the largest ever for a U.S. corporation.

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